Thursday, 11 September 2003

Dwight Klingenberg has a survey of the winners and losers from the fall out of the first year of Sarbanes Oxley. Some surprises, like private companies being on the loser list, even though they aren't covered, and have you heard of the Treadway Commission? One of the winners. Check out his article here. Not surprisingly, one of the tips is to stay on top of the HR issues caused by Sarbanes Oxley.

The Fifth Circuit remains a court that is favorably disposed to arbitration as a condition of employment. In Hadnot v. Bay, Ltd. (5th Cir. 9/11/03) [pdf] the arbitration agreement banned the arbitrator from awarding exemplary and punitive damages. Since such a claim would be permitted under Title VII, the basis for the suit, Hadnot argued that the agreement should not be enforced. Rather than disallowing arbitration, the district court struck the ban on the arbitrator's authority and ordered that the case be arbitrated. The Fifth Circuit upheld the action, finding that now that punitive damages were authorized, there was no reason not to require arbitration.

The Fifth Circuit also rejected Hadnot's contention that there was no consideration, relying on the famous language in Light v. Centel Cellular that a promise which depends on continued employment is illusory, so that no employment at will agreement can support a contract. The Fifth Circuit holds it is In Re Halliburton not Light which controls. The agreement was made at the time of hiring, and both parties were bound no matter how long or short the employment might be.

Wednesday, 10 September 2003

The 1991 Civil Rights Act which added increased clout for those bringing discrimination claims, including the right to compensatory and punitive damages and jury trials to name just two items, may actually have resulted in making it harder for minorities to be hired in traditionally white male dominated job markets. At least that is the theses of an article [pdf] by Paul Oyer of Stanford University published in the Summer 2003 issue of Regulation magazine. The Atlantic's Stuart Taylor, Jr. discusses the article in his Legal Affairs column.

Here is the money quote that Taylor takes from Stanford Law Professor John J. Donahue III:

"Once the egregious discrimination is gone," Donohue says, "then litigation-based schemes to bring ever more fairness become more burdensome and of dubious effectiveness. Litigation is a crude weapon;you can't perform surgery with a saber. Unfortunately, Title VII has become a matter of religious dogma for many academics, and certainly for those who benefit;plaintiffs' lawyers and consultants;and therefore immune to any type of critical inquiry."

Those who have toiled in the employment litigation arena know all too well the truthfulnessess of those words. But as today's, at least temporary defeat of an attempt to change outdated wage and hour regulations show, the idea that Congress will ever roll back any benefit it has provided, regardless of the harm that it might be causing, is most unlikely.

Healthsouth Corp., which has not been faring well for other reasons, has another bad day with an adverse verdict in an employment law case brought in Montgomery County, Texas, which is just outside Houston. Dr. Helen Schilling, the former medical director at a rehabilitation center claimed she was terminated for refusing to engage in illegal conduct by extending the stay of patients or hospitalize patients who did not need it in order to keep a minimum level of census. HealthSouth argued she was terminated because she was hard to get along with and will ask the court to overturn the jury's award of $465,000 for back pay and mental anguish and $1.05 million in punitive damages. You can check out the story in Yahoo news.

The lawsuit brought by the family of a young girl who was killed by an associate of Cooley Godward who was driving while talking on a cell phone goes to trial next week. Law.com has the story. Although the facts relating to the law firm's liability are complicated by the criminal charges that were brought against the lawyer, it is inevitable that many employers will face this kind of suit in the future.

The Harkin amendment which has the effect of barring the DOL's proposed change to the white collar exemptions has passed the Senate by a vote of 54-45. See the story in US Today. The bill will now go to conference committee with the threat of a Presidential veto if the language is not removed. It will be several months before the ultimate fate is known, but given the coming political campaign this may be an idea where the time for change is long past due, but may still not have come.

An employee was hired as a flat bed truck driver, even though he had a severely crushed hand which led to a 20% disability pension from the Army. When he was terminated for violating a safety rule, he claimed that the employer called him "crippled, disabled and handicapped." He sued under the ADA, not claiming he was actually disabled, only that the employer considered him disabled. Accepting for purposes of the ruling that the employer used those words, the Court still found no violation of the ADA. They all fall within "a range of meanings" and are not sufficient to show that the employer thought the employee was so far disabled as to meet the ADA statutory definition. It is that level required to meet the "perceived as disabled" standard. Tockes v. Air-Land Transport Services, Inc.. (7th Cir. 9/9/03) [pdf]. Chief Judge Posner commented that rather than being made in a case where an employee had been hired with an existing disability as here, a perceived disability claim would be more likely where an employee suffered an injury which the employer viewed as disabling when it was not.

Tuesday, 9 September 2003

Political disputes often lead to interesting law issues. That appears to be what happened in Shotz v. City of Plantation, Florida (11th Cir. 9/8/03) [pdf]. Shotz, an ADA expert, surveyed a Community Center at the request of one of the council members and wrote a letter to the council member reporting numerous ways it was not in compliance with the ADA. The council member provided a copy to the Mayor and ultimately others received it as well. Unhappy with the report, an assistant city mayor authorized an investigation into Shotz' background which included hiring a private investigator and authorizing the city attorney to conduct a data base search. Ultimately, information about Shotz' "criminal, credit, and driving records, medical history, involvement in professional disciplinary and other civil proceedings, property ownership, social relationships, including an ongoing conflict with a neighbor, as well as a criminal report involving his wife," were made public.

Shotz sued several individuals under the anti-retaliation provisions of the ADA. Although noting there were numerous cases holding that individuals are not liable for violations under the ADA employment provisions, the Court found that the retaliation provision under the public accommodations section was not so limited. It also raised the question, although not deciding it, whether individuals might be liable under the retaliation provisions even for employment related matters.

Besides making one cautious about doing favors for a council member, the case is also a good lesson for the dangers of investigating someone's background. The regulatory framework is broad enough that some legal problem is almost certain to be created.

Reversing a summary judgment, the 9th Circuit proves how fact intensive ADA cases are by its lengthy discussion of plaintiff's diabetes, which is classified as 'brittle' and which requires a strict monitoring of any food intake, often requiring her to test her blood sugar to ensure proper levels. Fraser v. Goodale (9th Cir. 9/8/03) [pdf]. Under these circumstances, the Court found that eating was a major life activity which was significantly limited. In an effort to ward off claims the Court specifically made clear it was not inviting those on a diet to complain that their major life activity of eating was threatened, but emphasized the unique circumstances of this case.

At least under the special circumstances laid out in detail in De Ascenscio v. Tyson Foods, Inc. (3rd Cir. 9/8/03). In an opinion that would provide a great exam question for a law school class on federal courts, the 3rd Circuit held that the district court had abused its discretion in exercising supplemental jurisdiction over a class action claim under the Pennsylvania Wage Payment & Collection law, where the primary jurisdiction rested on a collective action under the FLSA.

The opinion also provides a good discussion of the differences between opt-in classes, which have been chosen by Congress as the method for use in FLSA actions vs. opt-out class under Rule 23.

California legislators have sent another bill to Governor (at least for a little while longer) Gray Davis which labor supports and business strongly opposes. The Sacramento Bee has the story on Assembly Bill 76 which would make employers responsible for sexual harassment of its employees by customers or third parties "if employers -- or their agents or supervisors -- knew or should have known of the harassment and failed to take immediate action to stop it." This would reverse a 2-1 decision of an intermediate appellate court which is currently pending review by the California Supreme Court. I mentioned the original decision here last year, as well as an academic critique.

It seems unlikely that Governor Davis would choose not to sign this bill giving the current make up of his support in next month's recall election.

Monday, 8 September 2003

Basically applying the sports rule of no harm, no foul, the Court rejected the mechanical application of the alter ego rule even where companies are "joined at the hip." It affirmed the district court's finding that where a non-union company set up an installation company to do union work,that the alter ego doctrine should not be applied to make the non-union company contribute to benefit funds when it subcontracted with non-union contractors. The union had argued that the non-union company was in violation of a series of collective bargaining agreements it had with the installation company. Massachusetts Carpenter Central Collection Agency v. A.A. Building Erectors, Inc. (1st Cir. 9/8/03) In the Court's view, the union was never in a position that was worse than before the collective bargaining agreements were made and applying the alter ego rule in this situation would be inequitable.

Probably not in those words, but the Texas Supreme Court has made clear that mere flaws in an investigation alone are not enough to provide an inference of discrimination on the basis of a protected class. Last week's decision in Wal-Mart Stores, Inc. v. Canchola (Tx. 9/4/03) reversed a jury verdict which had been affirmed in an opinion [pdf] of the Corpus Christi Court of Appeals. A long tenured deli manager, who had been forced to work a reduced schedule because of a heart condition, was accused of sexual harassment. The store manager conducted an investigation and obtained statements concerning the allegations and then terminated the deli manager for violation of the sexual harassment policy. At trial, the deli manager raised numerous questions about the thoroughness and accuracy of the investigation.

The Supreme Court noted that it had a long policy of encouraging employers to conduct investigations before exercising their right to terminate at will employees, by not making them liable if their investigation were subject to challenge as imperfect. Recognizing the slippery slope of trying to draw lines about how good an investigation must be to pass muster, the Supreme Court wisely avoided trying to do so. Instead, the Court noted that the question to be asked was not merely whether there was pretext, but what the pretext was for. In order to support the jury's finding of disability discrimination, the Court held there must be some evidence that there was discrimination on the basis of a disability. Finding none, that claim was reversed.

The Court also reversed the jury's finding of intentional infliction of emotional distress. Noting that while the investigation and termination were undoubtedly unpleasant, an employer must be free to investigate and supervise its employees.

Sunday, 7 September 2003

OnQue, a vendor of COBRA administration software, has a message about, surprise, the dangers of failing to administer COBRA correctly. Notwithstanding their bias, they do have a good point in their article dealing with a 3rd Circuit summer decision, Emilien v. Stull (3rd Cir. 7/18/03) [pdf]. The scary thing for lawyers charged with assisting employers comply is that the court is now requiring a 'comprehensible' notice. Law schools may need to radically revise their curriculum.

Friday, 5 September 2003

The Corpus Christi Caller News has this story on Judge Terry Canales of the 79th District Court, which covers several South Texas counties. A review by a panel of appellate judges upheld a recommendation that he be removed from office because of misconduct involving sexual harassment. The panel did criticize certain procedural aspects of the Commission on Judicial Conduct's review which led to the recommendation. Judge Canales status while the matter is appealed to the Texas Supreme Court is unclear, although the Judicial Commission "assumes" he will be suspended during the appeal.

Wednesday, 3 September 2003

The Plaintiffs bar frequently laments the barriers of the the 5th Circuit, but it is not always a burial ground for employee's complaints. Today, the 5th Circuit re-instated a jury's age discrimination verdict, reversing the trial court's granting of judgment notwithstanding the verdict. The unfortunate defendant in this case was Haggar, which as I noted a couple of weeks ago, has not fared all that well in the court house. In Palasota v. Haggar Clothing Co. (5th Cir. 9/3/03) [pdf], the Court faulted the district court for not giving enough weight to remarks by management relative to age, instead passing them off to stray remarks. It also noted that the court should have given more weight to the EEOC determination of cause based on a 2 1/2 year investigation. All in all, while plaintiffs and their counsel would probably appreciate reversals of summary judgments against them, no doubt they are happy to see that when they do get to trial, and do get a verdict, that the 5th Circuit will be supportive if in fact their is evidence in the record. Of course, learning that same lesson is important for employers and their counsel as well.

For fans of divided and it appears frequently stalemated government, Harkin's proposal is an amendment to the appropriations bill for Health and Human Services, which President Bush has threatened to veto if it has language which would scuttle reform of the wage and hour regulations. This issue was decided by only three votes in favor of reform in the House. Stay tuned for this one.

Forgetting, or not knowing, that breaks that are shorter than 20 minutes have to be compensated cost hotels.com. HR Next has the report on the results of the DOL investigation into the company's practice of deducting for the two fifteen minute breaks it "gave" its call center operators each day.

An operating room is a place of high drama, and if one can believe what one hears and reads, often a place of high jinks as well. In what may be a story that feels way too close to home to many hospital administrators, it took a Norfolk, VA jury only 90 minutes to award $4 million to a nursing manager who was asked to resign after counseling an OR nurse because of the "sexually charged" environment in the OR. The nurse had been seen kissing and hugging a doctor and massaging his neck, back and legs. The nurse resigned after the counseling and threatened legal action.

Shortly thereafer the nursing manager, Stephanie Denninghoff, was asked to resign and six days later, the nurse was rehired. The Virginian Pilot has the full story. Although not mentioned in the story, my guess is that most administrators are asking themselves what role the physician may have played in all this.

The closing argument that was apparently not in tune with this jury was the hospital's lawyer's explanation of what happens in the tense environment of the operating room:

``You get some relief sometimes through a variety of physical contact,'' he told the jury during closing statements. ``What evidence is there of a sexually charged environment? It was just hugging.''

Tuesday, 2 September 2003

Forget the campaign of Arnold and others, one interesting question that will be known soon is how Governor Davis has been impacted by the campaign to make him unemployed. As reported here last year, Governor Davis vetoed a bill which would have barred making arbitration of disputes a condition of employment. But now thanks to the efforts of the legislature, he will have another chance. Business Insurance notes last Thursday's passage of A.B. 1715 and speculates that Governor Davis' need for the help of organized labor in next month's recall election may influence the way he views the legislation this time.

What a mouthful of initials. However, if you are a regular reader of this site, you probably know what the Older Workers Benefits Protection Act is. Today the 3rd Circuit vacated an earlier decision affirming a release under the OWBPA, after the EEOC joined with the plaintiff in seeking a re-hearing. The basic challenge was that the release was invalid under the OWBPA because it included an agreement not to “file a charge, complaint, lawsuit or other claim against [Lehigh Valley].” Plaintiff and Commission argued that this violated 29 U.S.C. § 626(f)(4), which provides that any waiver will not interfere with the EEOC's right to enforce the Age Act. However, the court held that section is clearly not included in the list of requirements for a valid waiver. It upheld the waiver against that and a number of other arguments. Wastak v. Lehigh Valley Health Network, (3rd Cir. 9/2/03) [pdf].

While this language would seem to give a green light for an employer to include such language, before doing so one needs to pay close attention to footnote 6:

... We note, however, that a regulation that became effective after the incident before us clearly precludes the inclusion of provisions that prohibit resort to administrative process. See 29 C.F.R. § 1625.22(i)(2) (“No waiver agreement may include any provision prohibiting any individual from . . . [f]iling a charge or complaint, including a challenge to the validity of the waiver agreement, with [the] EEOC.”). The presence of such a prohibition in a waiver agreement that is subject to this regulation could certainly lead a court to find, under proper circumstances, that the waiver “ha[d] the effect of misleading, misinforming, or failing to inform” the plaintiff, 29 C.F.R. § 1625.22(b)(4), thus rendering the waiver not “knowing and voluntary,” and, therefore, invalid. But, again, that is not this case.

Short word of advice, review your release in light of not only the OWBPA, but also the EEOC regulations implementing the OWBPA.

Which could seem redundant, but this article by Bill Maxwell of the St. Petersburg Times, points out just one way it is not. He focuses on a recent well publicized case where Applebee's was found liable for discrimination against one black employee by another, on the basis of his color. And according to Maxwell, that is not a new phenomenon.

The Bush Administration's efforts to bring the regulations for white collar exemptions into the modern world would be halted by the Harkin amendment offered by Iowa Senator Tom Harkin. (Any guess how the Presidential Candidate/Senators will vote on this one?) This will be a real battle as both sides look to be inclined to pull out all stops. Organized labor is quick off the mark running advertising in three states with Senators who it thinks would be persuadable, Maine, Missouri and Ohio, and also nationally on CNN. Yahoo News has the story, as well as a link to the new website for those supporting the Harkin amendment, www.saveovertimepay.com. If you just can't wait to see the ad, you can catch a version on the website.

The most recent report from Jury Verdict Research indicates that the median award for employment discrimination cases rose 14% last year to $200,000. Age continues to be the most lucrative claim, with a median award of $266,852. See the Business Wire's story for more information.